Millionaires who want to pay higher taxes

[Jason Harvestdancer]

That income inequality in the USA is becoming more pronounced.

Are you making a value judgement about that or merely stating the obvious?

Both.

You forgot to include the judgement part in your post.

 

[SimpleDon]

blah-blah-blah the already rich blah-blah-blah​

And when they do spend additional income, they don't buy more goods and services, they start buying governments and legislation, which further concentrates(*) wealth.

(* a technical term I've borrowed from nuclear physics)

Not to mention the insignificant portion of their wealth they used to corrupt academic economics into supporting neoliberalism to further enrich* themselves. Ref: Milton Friedman

* a nuclear physics term that has apparently fallen out of use.

 

[laughing dog]

Both.

You forgot to include the judgement part in your post.

Nope and I'm not going down one of your idiotic rabbit holes.

 

[Trausti]

 

[SimpleDon]

Here are the current marginal tax rates for 2018 and the marginal tax rates from 2017 according to Turbotax and their explanation of how the taxes are calculated.

2018 tax rates: Income $0-$13,600 = 10% Income $13,600-$51,800 = 12% Income $51,801-$82,500 = 22% Income $82,501-$157,500 = 24% Income $157,501-$200,000 = 32% Income $200,001-$500,000 = 35% Income over $500,000 = 37%

2017 tax rates: Income $0-$13,350 = 10% Income $13,351-$50,800 = 15% Income $50,801-$131,200 = 25% Income $131,201-$212,500 = 28% Income $212,501-$416,700 = 33% Income $416,701-$444,550 = 35% Income over $444,550 = 39.6%

How do tax brackets work?

Tax brackets show you the tax rate you'll pay on each portion of your income. As a taxpayer filing Head of Household, the lowest tax rate of 10% is applied to the first $13,600 of your income in 2018. The next chunk of your income is then taxed at 12%, and so on, up to the top of your taxable income.

So the maximum that the money needed to stay alive is taxed at is 10% to 12% for everybody, no matter what your income is. For people who earn less than $54,884.00 the combination of the earned income credit, the standard deduction and the increased child deduction will wipe out the taxes due or even provide a small credit.

Here are the earned income credit amounts and a short explanation again from Turbotax.

How much is the credit worth for 2018?

Here are the maximum amounts of this credit for 2018, based on the number of qualifying children you have:

- $6,431 with three or more qualifying children
- $5,716 with two qualifying children
- $3,461 with one qualifying child
- $519 with no qualifying children

The EIC is a refundable tax credit. That's good news, because it means that if the amount of the credit is more than the taxes you owe, you get a refund for the remainder of the credit. Even if you don't owe taxes, the government will refund this credit to you.

 

[Bomb#20]

The rich have to pay more of the taxes because they earn most of the money above the amount needed to live a reasonable life in this country. It is that simple. It isn't discrimination; you can only get money from the people that have money.

But that doesn't require higher marginal rates on some than on others. The tax rate is slope; the amount of money needed to live a reasonable life is intercept. Or to put it differently, we should tax people on their profit, not on their revenue.

Which is why we use a progressive income tax. To have low or no tax on the income that is needed to survive and progressively higher taxes on the amount above that.

Um, do you understand the concepts of slope and intercept? We could perfectly well have no tax on the income that is needed to survive and a flat tax on the amount above that, and that would entirely satisfy your "you can only get money from the people that have money" principle. According to your figures those earning under $54,884.00 don't pay the feds a dime. I submit that, barring medical crises and self-inflicted imprudence, those earning over $54,884.00 count as "people that have money".

But we do tax supermarkets on their sales. For some reason, it is called "Sales Tax." Go figure.

But supermarkets mostly sell food and food is mostly exempt from sales tax, at least in my state.

From the 21% figure I take it that someone has championed the Fair Tax which my Congressman Rob Woodall always files as HB1 or some other low number. Rob was picked as one of the five stupidest Congressmen based on an analysis of the written documents and speeches that he authors himself.

Stop "taking it that", and try reasoning instead of just pattern matching. I'd just been arguing for taxing profit rather than income, remember? 21% is the current general tax rate on corporate profits. I don't know Rob Woodall from Adam.

So yes, of course people have to be left enough of their income to live on. (And frankly, the rule that your medical expenses have to run over 7.5% of your income before they're deductible is just asinine.)

It is 10% of your income now. I expect to have almost $100,000 in medical expenses for last year, mainly for drugs and to pay for my caregivers,

That's harsh. Sorry. That $100,000 should be 100% deductible.

I don't have a problem with paying this because the alternative for me is a nursing home at about 8,000 dollars a month which I want to avoid as long as I can stay in my own homes.

Wise choice. My father-in-law was in a memory care home for two weeks before we found a way to let him stay in his house, and it was a nightmare.

But to jump from that premise to the conclusion that a guy in the top 0.1% should be paying a higher marginal rate than you in the top 2% pay would be a complete non sequitur.

I think that the proposals vary from a marginal tax bracket of 70% for the income that is above from 4 to 10 million dollars a year. I don't earn anywhere near that much.

You misunderstood me. I said that even with my upper-middle-class income I believe that I should have to pay more taxes. Therefore I am not surprised that people who earn millions in a year feel like they should be paying more.

Where are you getting that I misunderstood you? I understood you perfectly; I'm just pointing out that you haven't made a substantive argument for why people making 4 million a year ought to pay a higher marginal rate than you. That you and/or one of them believes they should, or feels like they should, is not an argument.

Neither of you is being taxed out of putting food on the table. The fact that it isn't discrimination to tax you more per dollar than an unemployed homeless guy doesn't change the fact that it is discrimination to tax Tom Cruise more per dollar than you and me.

I have read this over many times and I am still not sure what you are saying here. I can't tell why you think that progressive taxation is discrimination. You say that it is discrimination to tax Tom Cruise at a higher rate than I am taxed but not discrimination to tax me at a higher rate than a homeless guy. You might want to revisit this to make sure that this is what you wanted to say.

That is exactly what I wanted to say. It's not discrimination to tax you at a higher rate than the unemployed homeless guy because he doesn't have any profit -- any excess of income over necessary living expenses. As you said, you can only get money from the people that have money.

But you and Tom Cruise both have profit. You both went to the effort of earning more than you need, in order to get to enjoy life or to hedge against an uncertain future or to make a better life for your loved ones, and to finance public goods the government takes a cut of people's profit-making activities. And if you decide to go make an extra hundred dollars of profit the government takes (say) twenty, and if Tom Cruise does exactly the same thing as you and makes an extra hundred dollars of profit the government takes (say) forty. How the hell is that not discrimination? What, because Tom Cruise already made $75 million and the government decides people don't need $75 million? What the heck does that have to do with it? If the government put a 40% tax on Hanukkah decorations you'd recognize that as discrimination even though people don't need Hanukkah decorations.

I don't see progressive taxation as being discriminatory. We need taxes to prevent runaway inflation. You have to tax people who have money, and the people who earn a lot of money are the ones who have to pay the most.

And if we didn't have progressive taxation, and if you made $750,000 in the time Tom Cruise made 75 million, he'd be paying a hundred times as much as you. That counts as "pay the most". Stop talking as though a flat tax would mean rich people don't pay more than poor people. It's disinformation.

This is also reasonable because they are the ones who are benefiting the most from society and who have the most to protect, the primary function of the government.

And do you have evidence that Tom Cruise benefits more than a hundred times as much from society as you do? If his house catches fire does the fire department come more than a hundred times as fast? If the government doesn't stop the Japanese from bombing us does he get more than a hundred times as dead?

I don't know what earlier post you're referring to; but "growing income and wealth inequality" isn't a real thing, so whether it "damages the economy" is about as substantive a question as whether the virgin-stealing dragon is damaging the economy.

You say that "growing income and wealth inequality" isn't a real thing and then you post a chart that shows growing income inequality

The chart clearly shows declining income inequality. If you don't even know how to read a Gini Index chart, why do you feel qualified to pontificate on inequality?

I feel like this growing into a discussion similar to one on climate change where up is down and in is out. You are better than this.

You know, before you condescend to people and equate them with climate change denialists, you really might want to put in the fifteen seconds it would take to fact-check whether you know how to read a Gini Index chart.

<seven page screed about the evils of neoliberalism snipped for total lack of connection to my post>

Well, no, that reason isn't at all easy to understand. That reason looks for all the world like mush-headed folk-economics, blatantly disconnected from reality. Of course, it matters how you save it. When you save money in bank accounts, the banks pay you interest. Think about that for a minute. They're doing you the services of keeping track of your money for you, keeping it safe from thieves for you, and delivering it to anybody you tell them to for you, and they pay you! In any normal world, like the world before modern economies, you'd pay them for all those services. For them to pay you is as nutty as if you shot a guy in the face with a shotgun and he apologized to you.

So why do you think a bank does that?

The banks do that so that the government allows them to do what in essence makes them a bank, the ability to create money out of thin air to loan out and on which to charge interest.

No, that cannot be the reason they do it. Banks historically already paid interest on deposits, even before governments started limiting the amount of money they could create out of thin air and charge interest on. Government is simply standardizing and supervising a preexisting practice.

When you loan money to your good for nothing son-in-law the money goes from your account into his. Even under reserve banking when the bank loans you money they create the entire loan amount and deposit it in your account. They do it by typing the amount into a computer. That and double entry bookkeeping is all there is to it. The loan is your liability and the bank's asset. If you default on the loan it becomes the bank's liability to collect from you. If you pay the loan off the money that the bank created for the is destroyed.

And? Are you making the metaphysical point that the money loaned out isn't metaphysically the same money as the money I deposited? What of it? Money is a fungible commodity. The fact remains that they wouldn't put the money in my fictional good for nothing son-in-law's account if I hadn't first put money into mine, because that would be irresponsible and put the bank at greater risk of being wounded or destroyed in a bank run.

Magnanimity? It's owner feels charitable toward all these people laying off their responsibilities on her? Obviously not. The bank pays you because the owner wants to borrow your money from you, and she wants to give you a reason to lend it to her instead of to someone else, because she's going to make a profit on having your money for a while. How is having your money for a while going to make more money for her? Simple: the banker's going to re-lend your money to someone else, and she's going to charge him a higher interest rate than she'll be paying you.

No, the money that you and deposit in the bankis still there. When you loaned the money to your good for nothing son-in-law did the bank refuse to give him the money because it had been loaned to some else?Have you ever had that experience? I didn't think so.

Well gee, welcome to the not 1930s. Lots of people in the 1930s had that experience. Banking law in the 1930s was stupid. (Scratch that. American banking law in the 1930s was stupid. We'd have had a much easier time in the Depression if we'd fired our bank regulators and outsourced their jobs to Canadians.)

So let's think about this guy, whoever he is, who's willing to pay the banker a bunch of money in exchange for the privilege of getting to have your money for a while. Why is he willing to do that? What's in it for him? Does he like green, aesthetically? Does he get off on rolling around in a bathtub full of dollars? No, of course not. He wants to borrow that money because, let's all say it together, <drumroll please>

he's going to spend it.​

And when he spends it, it's going to pay for products or services that will pay someone else's wages, and it will encourage businesses to invest in their own business to make more profits. Q.E.D.

Yes, the borrowers are going to spend it. What happens to your explanation if the demand for loans exceeds the total amount of deposits?

What do you think happens? The interest rates go up. The banks charge borrowers more, reducing the demand for loans, and the banks' extra income from the higher interest rate lets them offer depositors a higher interest rate, which increases the amount of deposits.

Has it ever happened that the banks ran out of deposits?

What, all the banks at the same time? Not that I know of. But sure, individual banks have run out of deposits many times over the course of history, at least as far back as the Medicis.

Think about the whole economy. You are saying that all of the private debt in the nation, all of the home loans, car loans, student loans, business loans, credit card debt, etc. has to be less than the total amount of deposits in the economy.

We've been over this before, and I don't understand why you can't get this elementary point through your cranium. Whenever you feel the urge to write the words "You are saying", but you aren't following those words with a direct quotation, DON'T!!! You are a serial putter of words in other people's mouths. You are neither competent enough at understanding what other people say, nor interested enough in whether you have represented them correctly, to have any right to attempt paraphrase. By repeated systematic abuse you have forfeited your paraphrase privileges. Never again presume to tell readers what I am saying. It is a forgone conclusion that if you ever again say "You are saying that X.", you will be lying. You will inevitably get it wrong, and you have been warned that you will get it wrong, so you will not have the excuse that you really thought that's what I meant, so JUST DON'T DO IT!!!

If you continue to refuse to make any attempt to stop spreading disinformation about me, it means that you are a bad person. You should work on that.

No, I am not in any way, shape or form saying that all of the private debt in the nation, all of the home loans, car loans, student loans, business loans, credit card debt, etc. has to be less than the total amount of deposits in the economy. You just made that up. Of course a bank can lend out more than the amount of its deposits. Sometimes it isn't even an irresponsible thing to do, provided the statistical characteristics of its depositors and borrowers make the loan portfolio actuarially sound. That doesn't change the fact that having more deposits makes it feasible to make more loans.

What you discribed is 100% reserve banking and it has been tried. It didn't work well.

Good grief. Is there no idiocy you won't spout? Don't you even know what 100% reserve banking is? Not only is what I described entirely different from your misrepresentation of my words, but even your misrepresentation of them is entirely different from 100% reserve banking.

"Full-reserve banking (also known as 100% reserve banking) is a proposed alternative to fractional-reserve banking in which banks would be required to keep the full amount of each depositor's funds in cash, ready for immediate withdrawal on demand." - Wikipedia

That would mean the bank couldn't lend out any of the deposited money at all. That would mean the bank would have no reason to pay interest on the deposit. That is obviously not what I described. This is not rocket science. Get a bloody clue.

If you don't understand how "fractional reserve banking" works Google it and read. Here is one, the first link found by googling does fractional reserve banking create money?"

Stop condescending to people when you're in the wrong. Yes, I understand how fractional reserve banking works. Everything I wrote is entirely consistent with how fractional reserve banking works. Fractional reserve banking is government standardizing and supervising normal preexisting banking practice -- it's government telling bankers to bank responsibly, and adopting mathematical criteria for recognizing when they aren't.

<unnecessary two page lecture on FRB snipped>

No. The paradox of thrift applies to money sewn into a mattress. It demonstrably does not apply to money saved in an interest-bearing bank account. A parallel argument shows it likewise doesn't apply to money saved in the stock market.

No, the answer to whether the money saved in a bank somehow impacts the economy is answered above in my normal, excessive wordiness. It doesn't "somehow sneak out eventually" as someone here put it.

It doesn't "somehow sneak out eventually"; the bank quite openly lends out 97% of its deposits to people who'll spend the money.

The money put into the stock market also is withdrawn from the economy. The corporation doesn't see any gain from its stock valuation going up. Any profit made on the sale of stock comes not from the corporation, but rather from the person who bought the stock. To the corporation, its stock is a liability claiming against its assets, even the reserve stock that the company holds.

You can even argue that it has little or nothing to gain from an increase in their stock valuation. <blah blah blah>

What the heck has the stock valuation going up got to do with what we're discussing? That's not the saving event. The saving happens when somebody buys the company's stock in the first place. She's buying it in exchange for a promise that the company will give her a percentage of its profits, its dividend stream. Well, why the bloody hell would a company volunteer to give that percentage up in return for her money, if the company were just going to stuff her money under the company's mattress? The company volunteers to give her a percentage of its profits because it's going to spend her money. Duh! So no, money put into the stock market is obviously not withdrawn from the economy.

[And there is a difference in how the rich make this decision whether to spend or to save their income, <rest snipped since it proceeds from a false premise>

Why is this in your mind a false premise? It is based on the simple, observable fact that the rich save more of their income than everyone else.

You don't think that the rich save more of their income than everyone else does? This phenomenon comes from the simple fact that everyone else has to spend a greater part of their income to live. You don't believe that this true?

[sigh] It all proceeds from the false premise that savings are withdrawn from the economy! Remember, the false premise I had just gone to the effort of explaining was a false premise? I was not denying that the rich save more of their income than everyone else does. I was pointing out that what you inferred from the fact that the rich save more depended on your notion that saving is bad for the economy. But you did not make a substantive case for saving being bad for the economy, at least when we're talking about stock and about interest-bearing bank deposits.

<three more pages with no apparent connection to my post snipped>